Washington State: cannabis has never been so cheap

The consequences of the various cannabis legalizations around the world are just beginning to become clear, but one thing is certain: cannabis has never been cheaper in the states that have legalized it.

Steven Davenport, a research assistant at the RAND Corporation, has analyzed retail cannabis prices in Washington State since the legal market opened in July 2014. Prices have fallen every quarter since then, a a trend we saw in 2016 and who kept going.

The current retail price per gram, including taxes, is 7.38$, a decrease of 67% over the three years since legalization—a trend also seen in Colorado, where some business owners are calling for a minimum price on marijuana to prevent it from becoming too attractive.

Davenport expects the cannabis industry to continue finding ways to lower prices. «Some consumers will prefer higher-priced brands, but there will always be a place in the market for a brand that can produce cannabis of adequate quality at a lower cost.».

The decline in cannabis prices following legalization has significant implications for drug policy in general. The experience of Washington and other states that have legalized cannabis demonstrates how the prohibition of production and sale drives up drug prices. Prohibition imposes enormous costs on the drug manufacturing industries, which are passed on to consumers in the final retail price.

The same mechanism is at work in Amsterdam, where the production of cannabis for coffeeshops remains illegal. The pressure on illegal growers forces them to take greater risks, cultivate larger crops that grow faster, and thus spend more money before the sale. Add to that the fact that Amsterdam is still the cannabis capital of Europe—at least for tourists—and it’s hard to find White Widow for less than €10 per gram, while prices for more exotic strains soar to at least €16.

Conversely, the price of drugs can also act as a deterrent to use, along with the stigma attached to users and the fear of police crackdowns. We see today that despite the drop in cannabis prices, the Young Americans don't consume any more of it. On the other hand, those authorized to possess and use it do so more frequently, with few negative externalities so far. In fact, there has been a decrease in cannabis-related crimes.

If we apply this line of reasoning to harder drugs, which should we choose: a cheaper product that is less likely to lead to crime? Or lower consumption, with more crime? It’s a difficult question.